For Some Retirees, Home is Where the Debt is

Today’s pre-retirees and retirees tend to have far more debt than those in years past. In addition to factors like credit card payments and medical expenses, this generation is seeing the effects of higher home prices and easily obtained low down-payment mortgages in the early 2000s.1

Between 2003 and 2016, Americans 60 and older nearly tripled their household debt — composed of mortgages, home equity loans, auto loans, student loans and credit cards.2 According to the Employee Benefit Research Institute, households headed by a person age 75 or older held an average debt load of $36,757 in 2016.3

If you’re still carrying a fair amount of debt and nearing retirement, we can help you review your household budget to help plan for a more confident retirement. Please give us a call if you’d like to schedule a meeting.

One of the challenges in the new tax law is the interest-cap deduction on mortgage loan payments, meaning homeowners with high mortgage balances may be required under the new law to deduct less mortgage interest. The mortgage limit on new homes purchased is $750,000, while the limit on mortgages purchased before Dec. 15, 2017, remains $1 million.These numbers are important if downsizing is part of your debt-reduction strategy.4

Another major contributor to debt is the rising cost of sending children to college. Of the 3.5 million Americans who owe an average of $24,000 in Parent PLUS student loan debt, about half of them are parents older than age 50. Worse yet, the number of parents with student loans is rising at a faster rate than students.5 Unfortunately, all those debt payments could be used to save for retirement.

The No. 1 reason individuals file for bankruptcy is medical debt.6 Whether nearing retirement or already there, unexpected health care costs can seriously curtail retirement funds. It’s a good idea to work with a financial professional to develop a strategy for paying potential health care costs down the road.


Content created by Kara Stefan Communications.

1 Rebecca Moore. PlanAdvisor. Jan. 10, 2018. “Debt Causing Financial Vulnerability for Pre-Retirees.” Accessed May 11, 2018.

2 Michelle Singletary. The Washington Post. Feb. 26, 2018. “Should you retire your debt before retiring?” Accessed May 11, 2018.

3 Annie Nova. CNBC. May 9, 2018. “Almost half of Americans don’t expect to have enough money to retire comfortably — but there’s some good news.”–but-theres-some-good-news.html. Accessed May 11, 2018.

4 Anthony P. Curatola. MarketWatch. May 10, 2018. “Watch for these pitfalls if you want to deduct mortgage interest under the new tax law.” Accessed May 11, 2018.

5 Kathy A. Bolten. Des Moines Register. April 2, 2018. “Thousands of Iowa parents are going into debt to pay for their kids’ college (and they probably shouldn’t).” Accessed May 11, 2018.

6 Sharon Epperson. CNBC. Nov. 16, 2017. “Don’t let surprise medical bills drain your retirement.” Accessed May 11, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


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